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US crude balances loosened considerably in the week ending 27 March, as surging domestic production pushed inventories to a near three-year high, contrasting sharply with rapidly tightening product markets driven by record exports.

Commercial crude inventories increased by 5.5 million barrels to 461.6 million barrels, significantly surpassing market expectations. This marks the highest stock level since June 2023, placing inventories 2% above the five-year seasonal average and pressuring prompt oil futures.

The primary catalyst for the build was a steep rise in domestic crude production, which jumped by 380,000 barrels per day (bpd) to 14.0 million bpd. Trade flows offered little offset, with imports holding steady at 6.4 million bpd and exports rising only marginally to 3.5 million bpd.

Refinery activity further compounded the crude overhang. Crude inputs fell by 219,000 bpd to 16.4 million bpd, pulling the utilisation rate down to 92.1% of operable capacity.

Conversely, refined product balances tightened as international buyers scrambled to replace supplies disrupted by the Strait of Hormuz blockade. Motor gasoline stocks drew by 600,000 barrels to 240.9 million barrels, while distillate inventories fell by 2.1 million barrels to 117.8 million barrels, fuelled by a record high in total petroleum product exports.

The data highlights a distinctly bifurcated market. While ample domestic crude supply is capping oil prices, unprecedented international demand for US distillates and jet fuel is rapidly draining product stockpiles. As global buyers continue to lean on US exports, product markets face further tightening, which could drive up consumer fuel prices despite the underlying crude surplus.

Written by: Aiman Haikal